Has Facebook figured out smart phones? Wall Street thinks so.(Read article summary)
Facebook announced a $219 million quarterly profit. What has the social network done right?
Almost a year ago today, Facebook went public. Its infamous IPO last spring and subsequent price drop in stock had left investors worried.
However, much has happened in a year. When Facebook first went public, it had no real strategy for dealing with smart phones. Since then, it has launched Facebook Home, a series of Android apps that integrates Facebook into the phone’s operating system. There’s also been the release of Facebook Graph Search, which allows users to find other people by their job, likes, and locations. The Graph Search also allows advertisers to find and target users.
So, how else did Facebook beef up its revenue? Well, since last May, the company has updated its smart-phone application in order to ensure a smoother user experience. Right before the IPO, the social network also acquired Instagram, the photo-sharing application that became a hit last year.
All in all, the first quarter has proved that Facebook will continue to grow. The announcement of its $219 million revenue (up 38 percent from the previous quarter) signifies that Facebook must be doing something right, but what else does it mean?
1) Mobility is the key
Facebook has learned that if it’s going to make it as a company, it has to focus on mobile. The $219 million number announced today is made up of 30 percent mobile ad revenue. Coming from a company that had no mobile ad revenue last year, that’s something that should make analysts jump for joy.
2) Facebook still has “it”
The idea that Facebook is declining in popularity is, well, wrong. Chief executive officer Mark Zuckerberg announced that the social network continues to grow – this time in developing countries. “Now [new users] will be in developing countries -- after all so many people have already joined in places like the US and UK that Facebook is reaching saturation point,” writes the BBC’s Rory Cellan-Jones. Facebook saw its monthly users rise to 1.1 billion users in the last six months. That’s a total of 100 million new users.
3) Zuckerberg’s not afraid to take risks
It’s quite easy to get lost in the numbers announced. It looks as if everything is going great for Facebook; however, the company is still in an effort to prove itself. The numbers were strong, but they fell short of what Wall Street was originally expecting. The company’s high costs also have shareholders worried, but Mr. Zuckerberg insists that the money spent on new products like Home and Graph Search are “long-term investments.”